ICU Medical, Inc. (ICUI) Earnings Call Transcript & Summary

Hey, everyone. Thanks for coming to the ICU Medical presentation today. My name is Rohin Patel. I work on the medical devices research team at JPMorgan. It's my pleasure to have CEO, Vivek Jain, come and give an opening presentation, and then we'll follow with a Q&A.

Good morning, everyone. Thank you for your interest in ICU Medical. It's nice to see some familiar faces and some new faces in the room. And thanks to JPMorgan for this great event. It's hard in these presentations, you see a lot of slides, you see a lot of information. And maybe we'll try to -- we've had a unique story at ICU for the last number of years. And so maybe I'll just try to make a couple of opening comments that can frame what you'll see in the presentation. Sort of early last year and midway through last year, we started to talk about our company. From a valuation standpoint, we said that the risk reward finally looks like it's out of line, that there was reasonable upside from a value perspective in the journey we have been through. And I think we continue with that sentiment today. And if we wanted to try to categorize that into the 3 different levels that we see that on. In 2022, we completed our last strategic transaction, which turned out to be a lot harder than we thought. And we did a transaction with the Smiths Group where we said we wanted to be in the not-too-distant future, a $500 million EBITDA company. And to date, we've only sort of got 2/3 of the way there. And that was due to the fact that we went through a lot of operational challenges, but at some level, we were fundamentally underearning and we started to close that gap. And so the first reason we think the risk/reward starts to look more in line is we're addressing the reasons that we've been under earning, and we started to close that gap in '25. The second reason we think the risk/reward was interesting is there are some very sector-specific items to our core businesses around infusion pumps, infusion consumables and, to a lesser degree, infusion solutions that have happened in the competitive environment that lead to some market share opportunities for us. The third reason, we think the risk/reward is interesting is for a large part of our existence in '22 and '23, just about everything that could go wrong from a macro perspective went wrong. And to a large degree, some of those items and certainly very important ones have now finally broken in the right direction, which is the Mexican peso versus the U.S. dollar and the overall cost of fuel, freight, shipping, global logistics, et cetera. The two that haven't are the strength of the U.S. dollar and obviously, the rates that underpin them. And if those things change the other direction, those are also very additive to our situation. And so I think when we think about our existence and we'll get into the fact that we're at the beginning of a product cycle, and there's a lot of innovation coming in, some very specific things around patient safety and delivery of medications that underpin our existence as the world's largest infusion set and pump company. I don't want to lose the context of what we went through and the reasons that I think that help differentiate us amongst the choice of investment opportunities out there. And then lastly, I'll talk about the presentation a little bit on a pro forma basis. We were in the room next door thanking our new partner, a Japanese pharmaceutical company called Otsuka, who literally was presenting next door, where we've just consummated a joint venture with them for a portion of our IV solutions business. And so when we talk about some of the numbers and revenue amounts, et cetera, about our company, we'll talk about them both as is, but also on a pro forma basis as if that joint venture happened, And we can talk in the Q&A why we do such a transaction. So ICU Medical is really a pure-play infusion focused company. The vast majority of what we do are single-use consumables that are open systems that are not dedicated to a piece of hardware. And that's our largest segment called consumables. That's more than half of our business after our joint venture is consummated. Our second line of business is our systems business, our pump business. That's about 1/3 of our business after the joint venture is consummated. And even within that segment, while it's a $600 million, $700 million revenue segment, the vast majority of that business are also single-use consumables, but they are dedicated lock and key to the actual hardware that underpins them. And then the smallest line of business that we still will publicly report is our Vital Care segment, which is about 15% or 16% of our company. Those are largely single-use consumables, but they are probably not as tightly correlated in the infusion area as the rest of the products. Looking a little bit at it in aggregate. So the consumable stack on a trailing 12-month basis is a $1 billion business. I'll talk about each of the lines in there more specifically in a second, but it's compounding at a very nice rate for a number of years. The pump business is somewhere between $600 million and $700 million on a trailing 12-month basis. It's a combination of what we had on a legacy basis, the large volume parenteral pumps. The bottom of that middle bar and the products that came from the last acquisition, the home care pumps and the ambulatory and the pediatric pumps, the syringe pumps. And then Vital Care is where we're going to have a revenue adjustment as part of our joint venture. Prior to the JV, Vital Care was about a $600 million division. Half of that was IV Solutions. The remainder was the 4 businesses you see here on the extreme right-hand side of the box. The IV Solutions revenues will now be deconsolidated from our income statement. And so the revenue impact and the commensurate gross margin impact, et cetera, will flow through once the joint venture is consummated. That probably happens at the earliest April 1, plus or minus, maybe plus 30 days from that, somewhere in that time range. From a total company perspective, 80% of what we do is single-use disposables, 20% is hardware. Most of that hardware resides in that infusion systems pillar and a little bit in Vital Care. And post the joint venture being consummated, we actually tilt a little bit more international than we were. So just under 2/3 of the business is North America and 1/3 is OUS. From a valuation perspective, ballpark, we trade at about $5 billion or so of enterprise value. Debt at the moment is $1.3 billion, with consensus around $400 million of EBITDA post any adjustments for IV Solutions this year. We will receive $200 million in cash at closing of this joint venture, and so net debt would go to $1.1 billion immediately, and we obviously have amortization and pay down schedules this year that would bring it closer to $1 billion of net debt. And so the reason I'm belaboring that is if anywhere you were here 1.5 years ago or 2 years ago, we felt like we're in a very different position from a leverage perspective than we are today. So as earnings have improved, balance sheet has come down, normalcy as sort of setting allows us to make other choices on capital, capital deployment, capital return, et cetera, over time. Again, before I get into specifics about the company, there's a bunch of things that make the infusion industry attractive, and our team has participated in for a long time. It's a highly consolidated industry structure. A ton of regulatory barriers. The manufacturing assets as evidenced by some of the issues in the industry are hard to reproduce. It takes long lead times to get into the business. And a lot of the revenues are deeply recurring absent market events, so very, very sticky. There are a series of clinical tailwinds from guidelines that are being decided on and written today, and those are fundamentally about safety: the safety of medication delivery, the safety of handling medications before they reach the patient, the safety of preparing medications, et cetera. The profit pool in this category is really concentrated in North America and maybe 5 to 10 other countries control the vast majority of profit. There is an emerging software opportunity. This industry, infusion, unlike imaging or some of the big [indiscernible] has done a poor job of monetizing software. And as our new products come to market, it's a key effort for us to separate the fundamental razor and razor blade model that's existed in pumps and also add software into that conversation. And then I'll talk about it in the pump business, but there's some very unique things that have gone on with the market shares -- market share leader in the infusion pump space that leads to a lot of the U.S. market having to make choices over the next 2 to 3 years. For us, ICU Medical, we're the focused player. We've assembled the right assets. We've had to -- we've bought assets that have been essentially turnarounds, difficult situations, difficult circumstances, rebuild customer trust across those acquisitions. We have stable operations after a period of very unstable operations in '22 and part of '23. '23 was sort of the foundational year where, for lack of a nicer way of saying, got as bad as it was going to be and provided the baseline to grow off of. We started communicating early last year that we were fundamentally underearning relative to our peers and were starting to show what that improvement could be. We talked historically about having somewhat portfolio optionality, that continues. The first action and the most critical was to figure that out with IV Solutions, which we did. And as always, we've had a series of incentives that are aligned with shareholder interests. So jumping into a little bit about the 3 segments of our business, our largest and most profitable stack, the one we talk about first in our earnings scripts is our consumables business. The anchor tenant of that is the original ICU Medical innovation story and business around infusion therapy. Think about these products as the pipes and the connectors that control the last mile of medication being delivered into a patient. We were the innovators to help keep those pipes open. We have the largest number of patient days in the history of the world of our devices in the hospital on people receiving infusion therapy and we control that product top to bottom, all the way from the actual resins into sterilization out. And so we're hypervertically integrated. And therefore, our cost position is as competitive no matter where it's made in the world. Best cost position, best brand, most patient days, most innovation has created the leading position in that business for us. The same is true for oncology. Oncology is sort of a derivative of our infusion therapy business. Think about this as the plumbing that sits between dangerous drugs or expensive drugs and a clinician and/or a patient. There's been a lot of guidelines here that have driven that market. It was a little weird. It slowed down after a period of really attractive growth from 2017, '18, '19, '20. Post COVID, it lulled a little bit, but it is fully back. And I don't know whether that's just about screening and diagnosis and treatment or demographics going up, but oncology was an important growth driver that has really returned for us. These 2 businesses, which are the vast majority of that billion consumable stack have compounded at 6% or 7% a year for 5 or 6 years in a row. We see no reason that that's going to change. We finally have had the ability to get a little bit of price here. We're late a bit on the price discussion given some of the other challenges we had, but price, new wins, growth, innovation contribute both in infusion therapy and oncology to keep this part of that segment humming. The other 2 parts of the consumable stack were things we got in our last acquisition. The Vascular Access business that came from Smiths was the last mile that connects the pipe into the patient with catheters. That business was really neglected. It used to be the #2 market share player in the U.S. We're fighting to get that position back and have shown a lot of improvement. And the turnaround there has helped the growth rate of the overall Consumables segment, which was above 6% the last couple of quarters because Vascular Access has started to -- also we got the business back. Tracheostomy isn't exactly an infusion business, but it's very similar in the way we run it in terms of customization, clinical differentiation, being patient specific, and it's a very attractive market structure. We included in our consumable stack, it's a functional duopoly globally. We are the leading player in the silicone segment, and it's a chronic care category. If you get that patient, there's a chance they might be with you 15 or 20 years, and what you do makes a huge difference in their quality of life. And so all 4 businesses in that consumables business stack clear 1 or 2 in their markets with the exception of Vascular Access. We're fighting to get Vascular Access back to 2. And in terms of the infusion consumables as defined by the sets sitting next to an extension set or a pump, we're the largest player on the planet. I'll shift a little bit to our pump business. So this is the middle column on that original bar. If we went back in history, the large volume parenteral pump, which came to us via our first acquisition -- a large acquisition a number of years ago of Hospira from Pfizer. That put us in the LVP business. That business is the closest link to our consumables business. In fact, Hospira was the distributor for ICU, which is why we had to do the transaction in the first place. Hospira for many of its years was actually the innovator in topics like cybersecurity and IT interoperability and sort of lost its way. Today, due to some unique circumstances that have gone on the pump market, the market share leader has to refresh a lot of the installed base of the country. We have brought new technology to market in a product called the Plum Duo, which has been approved for just over a year now and a series of products coming very shortly called Plum Solo and Medfusion 5000, et cetera, to really have a meaningful technology solution to this market that covets some new technology. And ultimately, we want a different strategy than many players are existing within the market. We believe we've set up a market where our business is fundamentally about safety, safe medication delivery. We have the right tool for the right job. We have the most precise delivery tool and what actually makes the device smart is the IT that connects them and integration of that IT across all the modalities is where we're spending our investment money. IT isn't just table stakes. IT is more than table stakes. People talk about, "Oh, we have IT," but bidirectional connectivity with infusion pumps means the ability for a pump to put back into the HR, the information about what medication was delivered at what rate, what time, where, when, et cetera, helps hospital for accuracy billing, safety, et cetera. The other part about bidirectional connectivity is that pump can be programmed outside of the room. So it can be programmed in the pharmacy. Clinician can walk into a room, badge in, validates the right drug, right patient, right pump, just hit start, eliminate steps safer. That, at some level, is table stakes. Everybody says they have it. They don't even in fact, have the table stakes. But then there's a -- like every market, there's a bunch of ancillary applications that sit around on that. Where's my stuff? Where is my device? Where are my analytics? What am I using for drugs? How do I minimize noise alarms? How do I get connectivity with other smaller EHR vendors? And in all those spots, we've been the innovator because we've been the smaller market share player. We had to customize on the way hospitals ran their IT systems, their workflow, et cetera; the way pharmacy and the way drug libraries were managed in hospital settings. We were a little behind the technology curve 4 or 5 years ago. We didn't have a cloud-based system that was kind of ability to flex with large enterprises. That was also approved when we got the new pumps approved, and that's where we're iterating our software offering on. And ultimately, all of our different pump modalities will all speak to a single software package where a patient can be tracked all the way from a hospital where they have been receiving infusion to an ambulatory step-down center or ultimately to the Holy Grail, which is into the home because we are the large leading home care infusion device provider, and that's the crown jewel that came from Smiths. There is a road map across these products. The most important one, Duo, is already done and approved. We are very, very close on Solo. Solo is an important product for us. There's really 2 ways to create value in the infusion pump category. The 2 largest ways are: one, you have to gain competitive share. The Duo gives us the opportunity to do that. The other way to create value is you refresh your own installed base. ICU Medical's never had the opportunity to do that because the majority of our devices that we received from Hospira all entered the market in 2016 and 2017. So they were newer. Finally, this year or next year, our devices become older and we have the opportunity to sell new technology against our own existing installed base. And so getting solo approved is very important. For that, the syringe pump is integral. That was one of the reasons we undertook the pain and aggravation of the Smiths transaction. The syringe pump is important in the overall hospital story integrated with LVPs. And then the acute care products or the acute pain products of CADD have an opportunity both in the hospital, but also home care and ultimately, our job is to figure out how to get the value realized beyond just the CADD pump and the disposable in the home care environment. So correlating that with other vital signs measurements et cetera, and driving connectivity there is sort of the Holy Grail, and that's what our R&D efforts will be on over the next 2 or 3 years. So really, from a product perspective, the pump business sits at this intersection of a lot of industry stuff going on because a huge chunk of the U.S. installed base has to get refreshed, and we think we're sitting out at the front end of a whole series of new technology that's coming into the marketplace. Flipping a little bit to the value creation part of this discussion. I guess we've always believed, and it's been interesting journey for us that the gross margins speak to how valuable what you do, speak to how valuable your products are. And when we did our last transaction, we started life as a 37% gross margin company, including our IV Solutions business, which was a lower margin business. As we got into the transaction and we, in the name of trying to do the right thing, we rush to produce more to hold on to the market share and to serve customers. But the reality was some of the business was lost in that period. And so we were actually overproducing relative to current demand. So therefore, we had sort of over-earning or over absorption. Our gross margins were higher than the underlying business. We slowed that down. Our gross margins bottomed out at 35% -- 34% in 2023. And we started to say, "Okay, as production now meets demand and as we start to deliver on the synergies of factory closures, consolidations, et cetera, that will start to work its way back up." We had said in our discussion of under-earning that we, as a company, were under earning by about 500 basis points, 4 of which were on the gross margin line. That's the missing spread between the $500 million EBITDA company and where we were actually having results. A lot of those activities are in flight right now, and our target gross margin before we get to the JV was to get to 40% on our own. In November, we announced this joint venture in IV Solutions. It doesn't, by itself, create new cash, but it does change the look of the P&L as solutions was our lowest margin business. It will get deconsolidated. Now we'll only consolidate its net earnings through a minority interest line, and we will get a 300 to 400 basis point improvement immediately in our gross margins for those -- for that economic change. And then we continue to focus on getting to 40% on our own, the additional 3 points, which are the [ Wave ] 2 synergies from our plant consolidations, our manufacturing and supply chain activities, price and growth ultimately, and then there's a little bit more when the solutions joint venture is fully consummated. I mean when the JV stands up on its own, it doesn't require any services for us. And so to think about value creation in ICU, we're sitting there saying, do we have the newest, latest and greatest products in the core consumables and core pump businesses? Can those be reliable mid-single-digit growers? And then do the margins start to look like a normal medical device company underneath that? There's not that much at the OpEx line. And can all of that happen with the balance sheet that starts to look much safer, and therefore, you can explore what you should do with capital or else -- et cetera, after that. And so for us, it's very, very much about the gross margin conversation. We believe you don't have new slides year-to-year. And so this is the exact same slide we had in 2023 -- in '23, '24 and '25. In '23, we talked about kind of hitting the bottom, getting -- showing that our core business, the legacy consumables business was growing, that we had an opportunity to improve Smiths. We spent a ton on '22 on airfreight and serving the customer. We had to invest heavily to improve the quality system. We had to improve reliability of customers, get back to positive cash flow at the end of that year. Those things started to happen. And then we said in '24, last year, in the beginning, we said we wanted to get all parts of the portfolio growing. There was a whole bunch of contract renewals that needed to happen. Some of the events in IV Solutions accelerated those contract renewals, have certainly made them more secure. We need to have a fully stable supply chain. All of those items happened in '24. And the slide said '24 and beyond. And so now is beyond sort of and that meant new product approvals. Obviously, Duo got done. We're on the verge of Solo, we're on the verge of the syringe that we had to realize the next wave of synergies in self-help to improve our under-earning situation, manufacturing and logistics consolidation, some of the functional synergies, real estate, fuel, FX, et cetera. A lot of things have been worked. That's happening right now. They'll show up on this year's P&L. Free cash flow improved last year, a little bit easier because we started with too much inventory, but we had to continue to focus on free cash flow, continue to focus on items below line. We're trying to reduce the amount of adjusted lines in our overall income statement. Adjusted revenues will go away post JV, try to tighten up what's being spent below the line and ultimately to return to what the premise of the last transaction was where we lost 2 years was to return capital to shareholders, right? To turn value from debt into equity once you get to the right leverage amount, and we're very focused on that. And that takes priority over any additional M&A or any additional things that may come into the picture. And so we think we have technology. We have innovation. We're at the front end of some of these market situations. We have the right products heading into them. We have a balance sheet that's more secure. We have an operational platform that's more secure. And we just really have to execute, and that's just on the first of the 3 items I talked about in the risk reward, right? Item 2 and item 3 are still out there to come true. So thank you much for your interest. Brian, you should join me and we're happy to do any Q&A.

Thanks for the presentation. I just want to kick things off actually and just start off with the LVP market. Obviously, this is an exciting opportunity for you. You've mentioned new product launch, though this is a competitive space as well. There are some entrenched competitors. And obviously, that could potentially make it a little bit difficult. So if you want to just talk through maybe what you're seeing as far as the competitive landscape, the market opportunity and maybe hospitals capacity to evaluate kind of a new pump platform and just the process that, that entails?

Yes. I mean the beauty of this market and the challenge of the pump market is that there's a huge incumbent advantage, right? And so inertia is very, very strong. And so that is great for us where we're the installed base. It's also great for the competitor who may have the installed base. I think the view is from our standpoint, hospitals didn't have the time or the bandwidth to evaluate those and weren't necessarily forced to evaluate those situations in 2022 and 2023. That started to change this year and they are forced to make some decisions over the next 24 to 30 months that forced its decision upon them and their bandwidth and ability to evaluate the situation is better than it was because their own operations are healthier and stable. And the vast majority of people will stay with the current provider for ICU to create value even if 5% of them or 10% of them change. That's in our earnings, if we say relative to the size of our pump business, relative to the size of our LVP business. It's a huge NPV opportunity for us to go get. And we think we're certainly going to recoup that $80 million to $100 million of investments we've made in R&D to get these new products into the market.

Great. And maybe just shifting actually, just to talk a little bit about your joint venture. Can you maybe go over the strategic rationale for that progress? And just talk -- give a bit more color there on the venture with Otsuka?

I mean IV Solutions is an incredibly essential product, but it has been mispriced in like the history of its existence. And it's -- I think our calculus was, even though there was some short-term opportunity with maybe some of the national shortage, it was difficult for us to fund everything we want to do in pumps and R&D and technology development, everything we want to do in consumables and what would cost to modernize a factory and plant to be a IV solutions provider for the next 10 or 20 years. And so you have to make choices. And we thought the odds, our experience watching what happened to COVID test strips or vaccines or ventilators or even us last time in IV solutions, that the market doesn't normally reprice categories even if they're out of line and the opportunity to take years and years of earnings off the table upfront and to not have to make the capital commitments to modernize that business, but still get to participate in it from a customer and economic point was a unique needle we could thread and we should do it. And so we felt irrespective of what that meant giving up on a very, very short-term basis, it was the right thing to do.

And I mean, shifting a little bit to the consumables revenue. And I guess it looked great in the most recent quarter, and it seems to be going in the right direction. So I guess maybe if you could talk through some of the qualitative drivers behind that, the outlook for consumables, both the remainder of this year and in 2025? And what gives you the confidence that, that business will continue to look good?

I think there's been 3 or 4 very strong drivers in consumables as evidenced by years and years of growth here at attractive rates. Yes, I guess the first one I would say is we didn't really get price in '22 or '23, we started to in '24, maybe a little bit in '23, more meaningful in '24. And so that's been very helpful. Two, it's the niche markets we create around dialysis or the sides. They continue to expand at very nice rates. Oncology coming back is 3, has made a big difference. And then four, with the stuff that's happened in IV solutions, right, solutions and consumables are correlated. So some of those activities to the extent there's been a little bit of market share shift or gains, et cetera, are pieces of business that have come in to the book now that will be here for the next 3 or 4 years. So I think we feel pretty good about what's going to come in consumables.

is there anything you could point to, I guess, just into the second half '24 and 2025, like that could potentially raise any concerns? Or just any risks to keep in mind entering...

I think the hot topic for us, like many device companies has been tariffs lately, right, back to the macro topics. I don't think we have a particularly smart comment to make on it. There's a lot of value we can create just in that risk/reward item #1, running ourselves better, addressing our earnings. I would argue that the things in #2 or #3 are very powerful if breaking the right directions. Yes, there is this specter of tariffs and other issues where at the end of the day, our smartest thing to say is we believe logic will prevail, right? We don't have a lot more to add to that.

And then just, I guess, on that topic of under-earning, I guess like what is the gap from your perspective? I think you had a slide up earlier, maybe talking through it, but just what is that gap relative to the competition? And what are the contributors, I guess, to closing that gap moving forward? Like where is that going to come from both in the near term and then over the longer run?

Yes. I mean I think it's fundamentally for us about the gross margin line. And the gross margin line gets addressed with the biggest 4 things in that gross margin line are, are you running as few factories as you can and are they full as possible? And so we have been undertaking for the last 18 months and for the next 18 months, a very painful network consolidation activity and to do that without screwing anything up for customers is hard, right? And so less places and truthfully, many of them south of the border, right? There is a labor arbitrage opportunity regardless of what costs might be added to it. And so one is network rationalization. Two is price, right? Price makes a big difference on the gross margin line. The third is growth. So filling up the factories you have and then keeping them grow and getting the absorption benefits of that. And then fourth is the mix, right? Can you take out pieces of the puzzle that are still lower margin. And so there's not -- there's a little bit at the OpEx line. But for us to create value, gross margins have to expand gross margins to have to expand -- gross margins to have to expand. And I -- for my own from the cheap seats, right, I think it's reflective of what the valuation of the company, et cetera, right? You look more like the peers, things get more [indiscernible] figure that out.

No, that's helpful. I guess in more of a strategic bigger picture question, just like post the Smiths acquisition, it's been -- I mean, obviously that you had a difficult 2 years, and it looks from the outside of the last 6 months and from your presentation and everything that was kind of discussed, things have been improving. So they're stable to like upward trending. Would you characterize this as a fair assessment, I guess, as we sit here, and like anything like puts and takes moving forward to broaden that?

I think of course, there's risks and there's unknowns in FX and currency. But we started the conversation, the risk/reward feels pretty good. It feels pretty good to us, right? We see the levers we have in front of us, and we know how hard we work to clean things up. We put people through a lot, and we feel like the returns can finally start to [ flow ].

What would you say is kind of the differentiator relative to your competition, I guess, from an investor's perspective...

In every market, there's the focus player, right? That's our job. We don't have the breadth of -- we're not a $20 billion revenue company. We're $2.5 billion company. It shouldn't be $2.1 billion or whatever. We're the focus player. Our job is to do the best in the categories we participate in, give more customer service, faster, better, lower-cost production, more vertically integrated, et cetera. Every market has that player, that's us. We should get to some Q&A from there.

Yes, sure. I mean if anyone in the audience has questions, feel free. Can you bring out a mic? If not, I'll repeat the question for you.

You mentioned some -- you talked about the rationale for the JV and then also some of the share shift that we've seen. [Technical Difficulty]

[indiscernible].

Sure. My name is [indiscernible]. I wanted to ask you about the IV solutions business. We all know there's been some disruption there recently. It may be an opportunity for you. Curious how that opportunity is playing out? And how much of that do you think is permanent?

Yes. I mean, look, I think the thing with the solutions joint venture for us, we stepped back and said, "Do we have the right to win." And even -- and we're the #2 U.S. player asking ourselves that question. And I think for us to win, it would require significant technology investments. Those technologies are held by the person we are now partners with. And it was a better choice to bring them into the fold to bring that technology, and we thought that was good for U.S. health care. It was good for U.S. health care because there's a lot of innovation there that this country doesn't have, that exists in other places in the world that simplifies, standardizes, et cetera. And two, even if we've done a great job serving our customers and solutions, we truly were a single site also. And our most loyal customers after the event of the competitor were calling us and saying, "Aren't you a single site too?" That is no longer a risk because we're now plugged into a global network, right? And so we thought those 2 things were fundamentally good for the health care system. Yes, a little bit of share has shifted. That is good. More share could shift over time. It does have to be about bringing new innovation and new technology to the puzzle. And we think the partnership we have and we know what products can be brought are really differentiated. And there's a better chance of bringing them to this market in the context of this partnership than we would have ever had on our own.

How much of the share shift [indiscernible]?

It's contract. You don't buy solutions on a trading -- we did not sell solutions in this event on a trading basis, we only sold solutions to people if they signed a multiyear contract with us. We may have given up a little bit of short term for that, but we felt like we did not want to have the volatility of what happened last time.

Any other questions from the audience?

Can you just talk a little bit about what the other steps are [indiscernible]?

There's nothing that complicated. It's just the back and forth questions, technical stuff on the device. I mean it's very, very similar to the Duo device. There's a few nuance changes in the software and some of the parts. It's been a little bit of a quiet time with the regulators right now. So it's just slow. There's not -- I don't think there's anything to read into it.

With the JV with Otsuka Pharmaceutical, how do you retain the customers. There must be inherent advantage for you guys to have offerings on both the plastic and the water. Now the water is gone. How does that change your customer relationship?

Brian, do you want do that? You've been sitting here and you probably want to speak?

I think the answer to that is it doesn't really change the relationship with the customer under the joint venture. We're going to provide a number of services -- ICU will continue to provide a number of services to the joint venture, including all of the go-to-market commercial services. So from a customer standpoint, there really should be no change. It's just that they will benefit from having access to a larger network capacity if there should ever be the need, and so that I think that redundancy helps. But everything else from a customer standpoint, whether it's who they're dealing with for a day to day as far as their salesperson goes, customer service, billing, collection, all remains the same.

It will take a little bit of time. They have to get -- we have to get approvals on all of those sites, but that process has started. And obviously, the country broadly is interested in having more sites available to be able to supply.

You guys mentioned multiyear contracts for IV solutions. Have you been able to surge that production capacity given the shortages in the U.S. yet? Or is that something that's ongoing?

It's been ongoing. I mean we flexed up to the extent we could in the fourth quarter, and we are right now. But again, we -- and it didn't necessarily over -- no good deed goes unpunished. It didn't go over remarkably well with everybody. We said we're only going to provide these products to if you sign a multiyear contract. We ramped like crazy last time there was a shortage. At the end of that, we got to fire hundreds of American workers, right? We don't want to do that again. And so we've been a bit more cautious and people who are smart, recognized and say, "Yes, I seek that diversity," right? And some people are just traders, and that's probably not right for us.

We have a minute left, if there are any last questions. Otherwise, we can wrap it up. All right. Well, thanks, everyone, so much for coming.

Thank you for the interest. Have a great conference. Appreciate it.